Correlation Between Pacific Funds and Inverse Government
Can any of the company-specific risk be diversified away by investing in both Pacific Funds and Inverse Government at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Pacific Funds and Inverse Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacific Funds Portfolio and Inverse Government Long, you can compare the effects of market volatilities on Pacific Funds and Inverse Government and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Pacific Funds with a short position of Inverse Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Funds and Inverse Government.
Diversification Opportunities for Pacific Funds and Inverse Government
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pacific and Inverse is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Funds Portfolio and Inverse Government Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inverse Government Long and Pacific Funds is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Pacific Funds Portfolio are associated (or correlated) with Inverse Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inverse Government Long has no effect on the direction of Pacific Funds i.e., Pacific Funds and Inverse Government go up and down completely randomly.
Pair Corralation between Pacific Funds and Inverse Government
Assuming the 90 days horizon Pacific Funds Portfolio is expected to generate 0.61 times more return on investment than Inverse Government. However, Pacific Funds Portfolio is 1.65 times less risky than Inverse Government. It trades about -0.07 of its potential returns per unit of risk. Inverse Government Long is currently generating about -0.22 per unit of risk. If you would invest 1,284 in Pacific Funds Portfolio on November 29, 2024 and sell it today you would lose (10.00) from holding Pacific Funds Portfolio or give up 0.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pacific Funds Portfolio vs. Inverse Government Long
Performance |
| Timeline |
| Pacific Funds Portfolio |
| Inverse Government Long |
Pacific Funds and Inverse Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacific Funds and Inverse Government
The main advantage of trading using opposite Pacific Funds and Inverse Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific Funds position performs unexpectedly, Inverse Government can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Inverse Government will offset losses from the drop in Inverse Government's long position.| Pacific Funds vs. First Eagle Gold | Pacific Funds vs. Sprott Gold Equity | Pacific Funds vs. International Investors Gold | Pacific Funds vs. Europac Gold Fund |
| Inverse Government vs. Federated Government Income | Inverse Government vs. Us Government Securities | Inverse Government vs. Access Capital Munity | Inverse Government vs. Alpine Ultra Short |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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